Morning Report: 29 April 2016

GBP After Wednesday’s weak GDP data saw sterling take a slight knock downwards, the pound spent yesterday regaining lost ground, and as of this morning has reached new highs against the US dollar. Political turmoil dominated news headlines, and the only economic release of note was the Nationwide House Price Index, released by the Nationwide Building Society. The Index showed price growth in the property sector slowing in April, bringing annual growth to 4.9%. Nationwide’s release cited data from the Council of Mortgage Lenders, which suggested that mortgage growth rose sharply in March. Bank of England Governor Mark Carney once again expressed his opinion on the Brexit referendum, telling the Stockport Express newspaper that the economy was slowing down and that the looming referendum was “probably related” to this development. Today at 09:30 BST the GBP Bank of England will release its latest Money and Credit statistics, including lending data for the private sector as well as headline Money Supply.

EUR The euro continued to perform well against the US dollar yesterday, continuing its upwards trend from yesterday during early hours trading this morning. The Greek debt situation is once again looming as a potential threat to the euro however, with the announcement of an extraordinary Eurogroup meeting on May 9th. The situation is largely as it was the last time European leaders “resolved” the crisis. Greece’s debts remain unsustainable by any reasonable standard, whilst its creditors, notably Germany, continue to insist on no debt forgiveness, and repayment obligations comparable to those imposed on the losers of WW1. Elsewhere, ECB President Mario Draghi appeared in German tabloid Bild in order to explain that the eurozone was currently experiencing low interest rates due to low inflation, and that this was his job, despite the pain being experienced by German savers. As if to underline the point, German Consumer Price Index inflation fell to -0.2% in April, and Spain’s CPI contracted 1.1% in the previous 12 months. Today at 10:00 BST eurozone wide CPI will be released.

USD USD is weaker across the board this morning after yesterday’s Gross Domestic Product figures for the first quarter of 2016 showed that the economy had slowed to the lowest level of growth since Q1 2014. The figures showed the economy growing at a seasonally adjusted annual rate of 0.5%, well below the 1.4% seen in Q4 2015. However, weekly Unemployment Claims remained very low at 258,000. US GDPhas in recent years a habit of performing poorly in the first quarter, only to rebound later in the year, despite attempts to seasonally adjust the statistic, so yesterday’s figures are not necessarily a significant cause for concern. Today at 13:30 BST Personal Spending and Income data will be released, alongside the Personal Consumption Expenditures Price Index, which is the Federal Reserve’s favoured inflation measure.

CAD The loonie has benefitted from this week’s USD weakness and reached a fresh high for the year yesterday, while crude oil prices continued to rise. No Canadian data was released yesterday, but today at 13:30 BST monthly Gross Domestic Product Data will be released alongside price indices for Raw Materials and Industrial Products.

UK News

Reuters. UK house price growth cools after land tax changes – Nationwide: British annual house price growth cooled in April after the government introduced extra taxes on purchases of properties for rental and second homes, according to a survey from mortgage lender Nationwide on Thursday.

Reuters. Britain would pay a “Brexit tax” outside the EU – OECD: British voters risk paying a “Brexit tax” equivalent to a month’s salary by 2020 if they leave the European Union, the OECD said on Wednesday, joining a chorus of economic bodies warning against an exit.

Reuters. Pro-Brexit economists hail benefit of scrapping EU tariffs and rules: Britain would be richer if it left the European Union, a group of British economists said on Thursday, in contrast to warnings from leading global institutions of a big hit to output and living standards.